Banking
Credit Cards

Banks charging customers for NOT using credit cards

by Broderick Perkins

Your double-take on that headline is to be expected.

But it's true.

• Let your plastic collect dust for too long and you could get punished with an "inactivity fee."

• If you don't charge enough to suit your credit card issuer, it will pad your bill for you.

• Wisely pay off your balance every month to avoid interest and it'll still cost you.

Credit card issuers are making Scrooge look like a philanthropist as they scheme to devise more and more ways to shake you down when you aren't looking at the ever-changing "Terms of Agreement" set in small print.

• Since June, Fifth Third Bancorp has been charging customers $19 if they don't use their credit card.

• Citigroup is already charging annual fees to card holders who don't put more than about $2,400 a year on their cards.

• Next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99 if they pay off their balance every month.

Like playing a game of three-card monte, credit card issuers have switched the rules so quickly, so often this year it's tough to know which card is a winner and which is a loser .

Bottom line, it's probably a really good time to think long and hard about getting out from under the credit card boot on your neck.

At least consider shopping around for a better deal.

"If a consumer rarely or never uses the card they've been issued, they are costing the bank money in the way having to generate monthly statements on the account as well as actually issuing the plastic," said Nancy Osborne, chief operating officer of ERATE, a Santa Clara, CA-based financial information publisher and interest rate tracker.

"The old adage use it or lose it applies to credit cards too, but keep the spending to just the essentials these days," she said.

Even if you never carry a balance, you could get slapped around for trying to stay out of debt.

Think about it.

If you've stuffed your card into a mattress for a rainy day, to cover overdraft fees or just to have some mad money handy, you may not be very attentive when your statement arrives each month.

But if you overlook paying a fee for not using your card not using it enough or for dutifully paying off your monthly balance, you could get dinged with a late fee.

Banks, on the verge of skullduggery, are squeezing you to offset lost revenues stemming from recession-spawned delinquencies, accounts abandoned by disgruntled consumers and the effects of the new Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.

The CARD Act, among other provisions, restricts credit card issuers' ability to raise interest rates and charge certain fees under some circumstances.

Critics say the act's provisions are taking too long to become effective and by they time they do, credit card issuers will have set up a new set of fees that will warrant more regulation.

It's a cat-and-mouse game credit card issuers aim to prolong.

Expect them to have at least a few more fees up their sleeves.

"There are several other ways banks can make money issuing credit cards to consumers -- charging an annual fee, charging interest on the balance a consumer carries forward and the interchange of 2 percent to 3 percent they receive from the merchant for consumer purchases," Osborne said.

...along with coming up with new ones, of course.